I am the founder of Essex Financial Services, a Connecticut wealth management firm with more than $3.9 billion in assets under management. I have more than 30 years of experience in financial advisory services, and have received a number of investment management industry awards. In 2007 and 2008 I was named Barron’s #1 Independent Financial Advisor, and from 2004-2013 the magazine selected me as one of their Best 100 Financial Advisors in the U.S. Barron’s also named me Connecticut’s #1 Financial Advisor in the 2013 special report, “The Top 1,000 Financial Advisors”. I am a member of the CT and American Bar Associations, the Financial Planning Association and am a Registered Securities Principal. Additionally, I’m a board member of the Essex Savings Bank, Middlesex Hospital and the UConn Foundation. I received a J.D. from Temple University and a B.A. from the University of Connecticut.

How to Actively Manage Your Advisor

Many clients think their financial advisor has all the answers to their investment questions. Few of them realize they may be holding key pieces of information that could positively and profitably influence their portfolio. Their advisor should help them realize this.

A client’s active participation and ideas can play a vital role in the evolution and success of a portfolio, says John Rafal of Essex Financial Services.

In my experience as a wealth advisor over the course of more than 30 years, many excellent investment ideas I’ve encountered have come from clients. It may be counter-intuitive, but clients need to make sure they are interacting with their advisor in an active way – just as much as their advisor is managing them. The client’s participation, ideas and experiences can play a vital role in the evolution and success of a portfolio.

As one example, back in the 1980s, I had a client who was employed by a growing company that was clearly undervalued by the market. In discussing the firm, this client brought my attention to a long-term stock he had been accumulating. Over the course of several years, I listened to him describe his experiences of working at the company, review the fundamentals of the firm, the outlook and the price of the stock. It became clear to me during this period that the company was going to be an excellent long-term investment.

Prior to these conversations with the client, I’d not heard of the (then) obscure company. However, based on listening to what the client had to say and his descriptions, we made a calculated decision and bought it. I’m happy to say it remains an exceptional, long-term performer not only in his portfolio – but in most of our client portfolios today. All of this would not have transpired if the client had not talked and shared his observations. Similarly, it would not have happened if I, as his adviser, was not engaged or had been a poor listener.

Unfortunately many advisors overlook the fact that their clients are a rich source of ideas and observations. Of course, not every client realizes they have an active role to play.

In another case of a client managing his adviser – a long-time client introduced me to several new investment ideas that she had come across by dint of her own research. Many advisors would dismiss such ideas at once – given their source. I’ve always had a different philosophy. Several of her investment ideas were attractive and showed clear, balanced and insightful thinking. As a result, we began to test and incorporate some of the ideas — eventually moving them into our client portfolios. Several of the names from this now long-ago meeting include Core Laboratories (CLB), VisaVisa Inc (V), Nike (NKE) and Echolab (ECL). All four have been fantastic, long term investments.

I would say that one of the most fortuitous examples of listening closely and analyzing ideas a client actively brought to a meeting, occurred about ten years ago. At the time, the client approached me with a portfolio of MLP’s. They were foreign to most of us then – but speaking with my client allowed me to examine the space more fully. Eventually, we concluded it was worthwhile and began to invest. The ending to this story is clear — this became an outstanding long-term play. It was through this experience I discovered the JPMorgan Alerian MLP Index ETN (AMJ),as well as a mutual fund now in that space,Oppenheimer SteelPath MLP Alpha Plus A (MLPLX). These bouts of active client participation and critical listening, while a small percentage of our overall thinking, have ultimately had an impact on the client’s wealth as well as our clientele’s performance as a whole.

The moral of the story? If an advisor is an active, analytic listener, valuable ideas can float across the transom and be seized. The key is to be ready for it, and most importantly, for clients to speak up and share their ideas.

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